[ppzhan Abstract] In 2011, China's paper industry suffered from the double pressure of sluggish demand and excessive capacity. The boom began to decline from mid-year. Supply pressures may ease in 2012, but demand is facing uncertainty.
The downturn of paper products The Chinese paper industry suffered from the double pressure of sluggish demand and excessive capacity in 2011, and the economy began to decline from mid-year. The paper price dropped significantly. At the end of the third quarter, the enterprise inventory turnover rate was close to the low point of the first quarter of 2009. We expect earnings to continue to deteriorate in the fourth quarter, which is lower than market expectations.
Supply pressure may be eased in 2012, but demand is facing uncertainty. Under the aggressive capacity of 2011, the overall industry will maintain overcapacity in 2012, but supply pressure will be slightly reduced, but demand is facing uncertainty. We are relatively optimistic about double-adhesive paper and newsprint. The former's 2012 capacity growth rate will slow down significantly to 5%, while the latter will benefit from the capacity contraction in 2011 and the 12-year cost down. We think it is worth noting that there is a possibility of an unexpected improvement in the supply side of the coated paper.
It is estimated that in 2012, the price of pulp will drop by more than 10% year-on-year. The price of pulp is close to the bottom, but the rebound momentum is still insufficient in the short term. It may remain low in the first quarter of 2012, and then moderately upward. The overall trend is difficult to reproduce the significant rebound in 2009. The main reasons are as follows: 1) Global demand for paper products is weak 2) Supply pressure may increase from mid-2012. 3) The US dollar is further strengthened, and it will usually be used to curb the price of pulp. Overall, we expect that the price of softwood pulp will fall by 15% year-on-year in 2012, and the price of broadleaf pulp will fall by 13%.
Company: Chenming Paper and Huatai Shares cover Chenming Paper and Huatai Shares, all of which are given a “Neutral†rating with target prices of 5.03 yuan and 3.82 yuan respectively. We believe that Chenming Paper will achieve full production capacity in 2012, and its revenue will achieve rapid growth. However, the improvement of profitability is limited, and the performance pressure is high in the short term. The news paper of Huatai Shares is expected to benefit from the cost down. But other paper types are still recovering slowly.
The downturn of paper products The Chinese paper industry suffered from the double pressure of sluggish demand and excessive capacity in 2011, and the economy began to decline from mid-year. The paper price dropped significantly. At the end of the third quarter, the enterprise inventory turnover rate was close to the low point of the first quarter of 2009. We expect earnings to continue to deteriorate in the fourth quarter, which is lower than market expectations.
Supply pressure may be eased in 2012, but demand is facing uncertainty. Under the aggressive capacity of 2011, the overall industry will maintain overcapacity in 2012, but supply pressure will be slightly reduced, but demand is facing uncertainty. We are relatively optimistic about double-adhesive paper and newsprint. The former's 2012 capacity growth rate will slow down significantly to 5%, while the latter will benefit from the capacity contraction in 2011 and the 12-year cost down. We think it is worth noting that there is a possibility of an unexpected improvement in the supply side of the coated paper.
It is estimated that in 2012, the price of pulp will drop by more than 10% year-on-year. The price of pulp is close to the bottom, but the rebound momentum is still insufficient in the short term. It may remain low in the first quarter of 2012, and then moderately upward. The overall trend is difficult to reproduce the significant rebound in 2009. The main reasons are as follows: 1) Global demand for paper products is weak 2) Supply pressure may increase from mid-2012. 3) The US dollar is further strengthened, and it will usually be used to curb the price of pulp. Overall, we expect that the price of softwood pulp will fall by 15% year-on-year in 2012, and the price of broadleaf pulp will fall by 13%.
Company: Chenming Paper and Huatai Shares cover Chenming Paper and Huatai Shares, all of which are given a “Neutral†rating with target prices of 5.03 yuan and 3.82 yuan respectively. We believe that Chenming Paper will achieve full production capacity in 2012, and its revenue will achieve rapid growth. However, the improvement of profitability is limited, and the performance pressure is high in the short term. The news paper of Huatai Shares is expected to benefit from the cost down. But other paper types are still recovering slowly.
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